FT: Pension liabilities could scupper media deals


The depth of pension liabilities at some of the UK’s largest media companies could derail merger and acquisition activities, the Financial Times warned today.

Michael Rudberg, a partner at Ernst & Young said: “Pension plan deficits have ballooned in recent months, particularly for companies with large legacy plans in the media sector.

“Not only does this increase demands on future cash flows, but it is also one of the most critical factors in executing a sale transaction in what is an already challenging deal environment.”

Daily Mail & General Trust, Trinity Mirror and ITV were among those singled out as of particular concern by some financial analysts.

The report says that older media companies tend to be harder hit by pension issues as they are more labour intensive, tend to have quite large pension funds and generally have unionised work forces, which can make it trickier to cut back on staff benefits.

The gloomy forecast will undoubtedly fuel the growing belief in the media industry that the so called “big four” regional newspaper groups (Trinity Mirror, Johnston Press, Newsquest and Northcliffe Media) should become a big two – the FT says.

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